Supplementing Base Coverage with Limited Benefit Plans

Supplementing Base Coverage with Limited Benefit Plans
My Benefit Advisor

In the dynamic environment of employee benefits, employers are continually working to provide comprehensive coverage that meets the diverse needs of their company’s workforce.  Limited benefit plans have emerged as a pragmatic solution, offering targeted coverage for specific healthcare needs or financial protections.

Limited benefit plans, also commonly known as mini-med or fixed indemnity plans, are benefit options that possess a reduced and more restricted level of benefits when compared with comprehensive medical plans, but with lower premiums as well. They typically offer coverage for specific or targeted healthcare services or financial protections with predetermined limits.  Limited-benefit plans can include critical illness plans, indemnity plans and “hospital cash” policies. These plans are not regulated by the Affordable Care Act, and it is not advisable that they serve as an individual’s only medical coverage.  However, in most situations they can be a good supplement to a base and more comprehensive medical plan.

Applicability of a Limited Health Plan

Limited health plans can be beneficial for those who feel they need additional coverage that goes beyond their traditional health insurance plans. Though they are not intended to be a replacement for major medical health insurance, limited plans can be a good supplement to some major medical plans, such as those with a high deductible.

Individuals covered through a high deductible health plan (HDHP) can often benefit from enrolling in Limited Benefit Plans. Although HDHPs offer comprehensive coverage, the standard copay aspect of the plan does not kick in for any services outside of preventative care until the deductible is met. That could mean that the individual or their family can be exposed to significant up-front out-of-pocket expenses. A limited health plan can help offset the deductible in some instances, depending on what the limited plan covers.

Though not intended as a replacement for major health insurance, limited plans can still provide at least some level of financial coverage for those without a comprehensive base medical plan. Limited plans might especially work well for individuals that need temporary stop-gap coverage until their more comprehensive insurance program goes into effect, for those who were recently laid off or are in-between jobs, for younger individuals aging off of their parent’s health insurance, individuals who have lost their medical coverage, self-employed persons without access to group coverage or anyone looking to offset the costs associated with high deductibles and out-of-pocket expenses.